Does consolidation really save tax dollars?

As many New York State readers already know, the idea of consolidation keeps bobbing beside strained budgets and oceans of red ink. Surely there are savings to be found in reducing the number of municipalities and their sometimes-duplicated services?

In Ontario the same urge to reduce is called amalgamation, and quite a lot of that happened in recent years. Ottawa, for example, went from a small area that was truly at the core of the city to a massive, sprawling political unit that’s now more rural than urban, in terms of land area.

It wasn’t a choice either. In Ontario, municipalities exist (or vanish) at the behest of the province, and the government at that time wasn’t taking “no thanks” for an answer.

Gazing at any map, it certainly seemed logical to make, say, Ottawa and Nepean a single municipal unit. To the uninformed eye, there was no knowing where one left off and the other began anyway. Even so, many residents of Nepean protested mightily. After all, their city was so well-run it usually had a surplus! In contrast, Ottawa seemed more of a mess and tended to be short of funds. “It’s just a money-grab” was a complaint often heard at that time, from residents of “have” municipalities.

Having lived through that change in Ottawa myself, I could elaborate on this at length. After an initial year in Kanata, we intentionally moved to a rural municipality. Rideau Township was lovely, with reasonable taxes, good basic services – all managed by a mayor and small council mostly made up of old-timers who knew the area inside out. I certainly resented being forced to give that up.

Well, it’s been more than a dozen years since eleven historic townships were lumped into modern Ottawa in 2001. To be honest, the change presented both pros and cons. Whether the pros outweighed the cons remains a matter of opinion and study. But the basic justification – that such mergers save money – is still cause for debate.

All that is why a recent study made a splash across Ontario, particularly in Toronto and Ottawa.

According to new research by Western University professor Tim Cobban, there was a province-wide  increase in many amalgamated municipal workforces. As reported by David Reevely for the Ottawa Citizen:

“I think they really overestimated the economies of scale they thought were available, especially where there were two-tier structures,” Tim Cobban said in an interview. In places like Ottawa and Toronto, which had lower-level municipalities for local duties and regional governments managing things like police and transit service, most of the tasks it made sense to share were being shared. “Those services had already migrated to a regional government.”

Cobban’s research group at Western crunched figures from municipalities across Ontario and found that from 1995 to 2010, municipalities that weren’t restructured increased their workforces by 1.77 full-time workers for every 10,000 residents. Those that were amalgamated hired 3.25 workers for every 10,000 residents.

They also compared their workforces one year before amalgamation with five years after. Ottawa went from 9,767 full-time equivalents to 12,813, an increase of nearly a third.

Now, Cobban found that a jump in municipal workers was not a hard-and-fast result. According to his figures, at the 5-year mark, Toronto’s municipal payroll was actually down by 2.7 %. But Ottawa seems to excel at hiring. Crunching the head-count numbers even further, the Citizen article says at this point Ottawa has attained a “54-per-cent increase over 14 years.”

But not so fast, says the City of Ottawa, according to this follow-up story:

His statistics are wrong, the city’s Catherine Frederick said in an email Wednesday, two days after the Citizen asked the city what it thought of Cobban’s study. In 2000, the pre-amalgamation municipalities had 12,786 full-time equivalent jobs, she wrote.

Since then, it’s true that the number of city jobs has grown to 15,134 as of end of last December. That’s an increase of 18 per cent, Frederick wrote, during a period in which Ottawa’s population has also risen by 18 per cent.

Being part of greater Ottawa is mostly a moot point now, although a shrinking rural minority would still love to disengage. Support to at least consider de-amalgamation occasionally comes from urban city councilors who are annoyed the rural districts currently hold disproportional weight in council votes.

One still sees innumerable red and black  “Carleton County – yes!” road signs scattered across rural Ottawa, a wishful cry for an all-rural district. Still, the province would have to agree to let those areas leave, and the cost of yet another shake-up seems prohibitive. De-amalgamation remains little more than a discussion point, at present.

What happened in Ontario may not translate into what’s possible, or likely, in New York. And the biggest part of the problem in Ottawa was the forced marriage of rural, mostly-conservative country dwellers with urbanites and suburbanites. At times, that’s an unhappy blend.

But, on this side of the border, some would say blithe assurances that “amalgamation saves money” were more easily made than kept.

Tags: amalgamation, canada, consolidation, economy, Ontario, Ottawa, politics, public policy